Browse Month: July 2019

Loan Rates – Saving and inflation

Nevertheless, an extremely large number of Belgians are willing to accept a loss of purchasing power.

“The average return of 0.12% on savings accounts is far from sufficient to compensate for inflation in Belgium of more than 2%,” says Good Finance. Savers therefore lose more than 2% of their purchasing power on an annual basis but still keep feeding their savings accounts.

At the end of February there were more than 261 billion euros in the regulated savings accounts of our kingdom. . “That’s much more than the liquidity reserves that households need,” continues the Chief Investment Officer of Good Finance

A continuing fall in interest rates

A continuing fall in interest rates

In the last 10 years, the pot of Belgian savings books has risen by 68%. And while the offered interest rates melted like snow in the sun. Most banks adhere to the legal minimum of 0.11%, including the fidelity premium. “This fall in interest rates reflects the policy of the European Central Bank (ECB)” clarifies Good Finance.

‘The bank of the banks in the euro zone has reduced the’ referent ‘to 0%’. In the wake of this refinancing interest, the interest rates on savings accounts were carried away. “That is reinforced by the negative interest rate of -0.40% for deposits from financial institutions with their central bank.”

This measure represents a significant cost for the financial sector that is forced to absorb its indirect losses on customers’ deposits through other activities.

The less the savings are used to support the economy, the longer the European Central Bank will continue its low interest rate policy.

Suspicious savers

Suspicious savers

“In addition to installing low interest rates for loans, the objective of monetary policy is to discourage saving and to encourage investing in equities and bonds. These products are more economically interesting because they are financial initiatives from companies and the government.”

The Belgians, however, continue to stick to their savings book. Nearly 3 in 4 respondents to our survey * confirm that they continue to save while slightly more than 1 in 3 declares to invest. “This reflects a deep distrust,” said Good Finance. Good Finance’s Chief Investment Officer emphasizes that savers are still marked by the fall in stock markets during the 2000-2003 crash and, of course, the 2008 financial crisis. March 2009 was made possible in particular by the sovereign debt crisis in the euro zone – and recently also major political uncertainties.

The two most remarkable events are of course the decision of the United Kingdom to leave the European Union and the election victory of Donald Drumpf in the United States. This rise of populism threatens to spread to other countries, so that only uncertainty increases. Regular price movements of the 45th president of the United States illustrate this.

The snowball effect

The snowball effect

“In such a context, it is understandable that the investor tends to be cautious. That is a normal psychological reflex, but it is not necessarily the right direction. The doubts, the market corrections and even the fall of the markets are indeed part of “The evolution of the financial markets. Two world wars, the Great Depression and many other crises have not prevented the stock markets from making progress throughout the twentieth century.”

Good Finance also states that the caution of savers creates a snowball effect. “The less the savings are used to support the economy, the more the Central Bank will pursue the low-interest policy. Its impact is further enhanced because the commercial banks are confronted with stricter regulations. Their credit capacity is therefore lower for the same amount. of deposits collected. “

Light recovery in the making

Light recovery in the making

According to Good Finance’s specialist, Belgian families are gradually showing less caution. They are more informed about investments and their savings account balances have fallen slightly since the fall of 2016. This is accompanied by a recovery of the eurozone economy in the past quarters.

“But this evolution is still too limited for the monetary authorities to change their policies quickly. The interest rates will therefore remain low for a while in the euro zone, which reinforces the potential interest in investments.

What is a savings and loan cooperative?

Savings and loan cooperatives (SOCAP) are non-profit entities whose corporate purpose is to offer financial services. They are inserted into a worldwide movement of a social nature, called cooperativism , which gives it some special characteristics. This article allows you to know in detail what a savings and loan cooperative is, and what its characteristics are.

In Mexico there are more than 600 Cooperative Savings and Loan Societies (SOCAP) between authorized and unauthorized; From them we hear that some appear or disappear, merge or absorb them, are regulated or are not, expand or break, etc .; However, despite the fact that the savings and credit sector is 62 years old in our country, it has not been until the last 15 years that it has grown and made itself known in an important way.

What is the cooperative movement?

What is the cooperative movement?

The cooperative movement is a current that promotes cooperation in the social rank of its members. This is done through voluntary associations called cooperatives, which allow them to obtain greater benefits for the satisfaction of their needs.

Although the movement is social in nature, it encompasses an economic aspect, promoting the financial association of people. This, through credit unions, popularly called as town banks .

Who regulates savings and loan cooperatives in Mexico?

Who regulates savings and loan cooperatives in Mexico?

The National Banking and Securities Commission and the Auxiliary Supervision Committee of the sector.

What services does a credit union offer?

The main services offered by SOCAP are:

  • Savings accounts It offers you this service, usually without setting a minimum amount, or charging maintenance fees. Some allow the opening of accounts in dollars and pay interest regardless of the amount saved.
  • Time deposits . You can place your money on a fixed term and choose if you charge interest generated monthly or at the end of the term.
  • Loans Depending on the capital available to each SOCAP, you can offer different loan modalities. The so-called micro-loans stand out, which are personal loans for low amounts and low fees and do not have excessive requirements. Some cooperatives even grant mortgage loans and home equity loans.
  • Contributions A few SOCAPs offer the opportunity to become a member of the cooperative, through a capital contribution. Your contributions are placed in your own contribution account and delivered to you at the time you decide to withdraw. These contributions work as collateral when you apply for a loan in the corresponding SOCAP.

Characteristics of cooperatives

Characteristics of cooperatives

• Simple alternative to access savings and credit with more viable and favorable conditions.

• Interest rates offered are competitive with those of other financial institutions.

• Some provide education and training to people (cultural savings and credit programs).

• Presence in rural areas.

• They allow small amounts to be deposited and grant smaller loans than traditional banks.